The economic growth outlook for Central America and the Caribbean in 2025 will be low, similar to 2024. For analysts, the trend will continue, but a slight improvement is expected for the region, as issues such as high inflation rates will be partly mitigated. Against this backdrop, attracting foreign investment to these countries is a priority for the private sector and governments.
Investment Promotion Agencies (IPAs) have a lot to say on this. According to the Inter-American Development Bank (IADB), every dollar a country spends in investment promotion campaigns generates $41.7 dollars of foreign investment. As a result, one of the keys to countries’ success in the region has been the role of these companies in developing nearshore business.
In order to learn about their perspectives on local investment and business, and specially on the nearshoring trend, we consulted the directors of three IPAs in the region.
Interest and foreign direct investment in the country
Sekou Alleyne, President of Invest TT, Trinidad and Tobago:
“The level of interest in the BPO sector specifically right now is high for those that are looking for unsaturated locations near shores. There’s a deep dive into where they can service their North American clientele from a location that is English-speaking, near shore, but not as well known for the BPO sector.”
Gerardo G. Peláez, General Director of PROPANAMA, Panama:
“The IT and BPO sectors benefit from advanced telecommunications infrastructure, strategic location, and a highly skilled bilingual environment, which has attracted significant investment from multinational companies. In terms of call centers, proximity is key for markets such as the United States. Cost efficiency has positioned Panama as a competitive and profitable destination for customer service operations and outsourced services.”
Laura López, Managing Director of PROCOMER, Costa Rica:
Laura López, Managing Director PROCOMER, Costa Rica
“Costa Rica has established itself as a leader in digital services and technologies in Latin America, and continues to be an attractive destination for investors. The country has shifted from an economy that used to be traditionally focused on agriculture to one increasingly driven by high-value services and technological innovation. This shift is largely due to foreign direct investment (FDI), strong government support and a growing pool of skilled talent.”
Strategies amidst the downturn:
Sekou Alleyne: “We are promoting Trinidad as an investment destination, we’ve worked very hard to proclaim the Special Economic Zones Act. It offers benefits across sectors like manufacturing, agrobusiness, and BPOs. That allows companies to come into Special Economic Zones inside the country, which offer benefits such as lower income taxes: 15% duty-free imports of raw materials and machinery equipment, as well as no property tax and no staff duties. It is significant in terms of the capital expenditure required to set-up.”
Gerardo G. Peláez: “PROPANAMA has adjusted its investment attraction strategies by focusing on the diversification and digitalization of its services. Through a series of international campaigns and sectoral events, we have managed to consolidate Panama’s presence on the radar of global investors, highlighting its competitive advantages, such as world-class infrastructure, tax incentives, and an environment conducive to innovation.”
Laura López: “PROCOMER is actively working to strengthen and develop the capabilities of the population, with the objective of promoting technical and professional education. That way, we foster the skills and competencies necessary to face the challenges of the global market. The main objective is to ensure that Costa Rica has a highly qualified labor force ready to meet the requirements of the market. In addition, a Comprehensive National Strategy for the Promotion and Attraction of Foreign Direct Investment was presented last year.”
Standing out from other countries:
Sekou Alleyne: “We still have significant opportunities for many more companies to come into the country, in very highly populated areas, with high underemployment among the demographic that tends to work with BPOs. So there’s much opportunity in our capital city along our east-west corridor. The same is true for the central part of the country, and particularly in the south. In fact, none of the call centers have gone down to the second major city in Trinidad and Tobago yet. Our technological infrastructure, from a work-from-home perspective, has worked very well for call centers, whether they are on-site or hybrid.
Our location very far south in the Caribbean protects us from storms and hurricanes. From a business continuity perspective, Trinidad and Tobago doesn’t deal with that kind of problem. If you are already located in one of these other locations, from a business redundancy and continuity standpoint, we promote Trinidad and Tobago as a secondary location. But if there are any challenges in the other sites, we’ll be up and running 24-7.”
Gerardo G. Peláez: “Panama maintains a strategic advantage over regional competition due to its geographic location, which places it at the center of the Americas, facilitating access to Latin American and U.S. markets. In addition, Panama has a world-class logistics infrastructure, including the Panama Canal, ports on both oceans and an international airport with direct connections to key markets. In addition, the country offers a favorable tax environment through incentives such as the Company Headquarters Law, which exempts companies operating in strategic sectors from taxes. The high quality of its labor force, which is considerably bilingual and specialized, is another differentiating factor, as is the flexibility of the labor regime, which facilitates the operation of foreign companies.”
Laura López: “Our renewable electricity matrix is one of the main pillars of Costa Rica’s value proposition for attracting foreign direct investment. By 2023, 95% of the Costa Rican electricity matrix will come from renewable sources. This fact has been one of the main reasons used by companies installed in its corporate core to continue growing in the country. This is a priority issue and it is natural in our country’s discourse in the investment promotion process.The country’s political and economic stability is also a differentiating factor in the region. Not only does it have a recognized democratic tradition and a peaceful environment, but also one of the foundations of its stability is the fact that Costa Rica has not had a permanent army since 1948.”
Challenges over the past year
Sekou Alleyne: “The major challenge for us would be awareness of Trinidad and Tobago. Besides oil and gas, and the touristic appeal of our Carnival, citizens still don’t really know Trinidad and Tobago as an investment destination. We are working on our country brand to be more competitive in the region. We’ve been big in business tourism. However, with the advent of the new agency, there’s going to be significantly more resources placed on generating awareness.”
Gerardo G. Peláez: “In the last year, one of the main challenges has been the intensification of competition in the region, with countries that have also strengthened their strategies for attracting investment in the IT and BPO sectors. At the institutional level, we are also promoting more agile and efficient mechanisms for the management of permits and procedures, reducing response times and facilitating foreign investment.”
Laura López: “One of the challenges in attracting investment is the availability of qualified talent, both in Costa Rica and the region. Our talent has been key in the development of our country, so it is essential to continue investing in education and training, focusing on the skills demanded by the identified strategic sectors. This includes strengthening STEM (Science, Technology, Engineering and Mathematics) education from early childhood through higher education.
In a context of growing demand for specialized roles in the IT sector, the country must seek to maintain competitiveness in labor costs, as well as in other costs necessary for operation. In addition, other benefits such as remote working or flexibility have become popular, so the country is also working to provide the infrastructure and legal conditions to enable this.”
Investors’ expectations
Sekou Alleyne: “I think they are more willing to look at new locations that they were less willing to look at earlier. Also, investors are not just looking down to one location. They’re actually going for two locations to support their redundancy requirements, particularly in the BPO sector.We have also seen investors from the Far East, particularly China, are more interested in manufacturing, architecture, and infrastructure in this region, for national manufacturing purposes to be able to enter the U.S. market from a closer shipping standpoint and from a lower duty standpoint than they get from China. Therefore, we’ve seen investment flows in the manufacturing and logistics sector coming in from China as well.”
Gerardo G. Peláez: “In recent months, we have seen a significant shift in investor expectations, with them now prioritizing sustainability, technological innovation and the adoption of advanced solutions. Investors are looking for an environment that are not only favorable in terms of operating costs, but also in terms of companies’ ability to adapt to global technological trends and comply with environmental and social standards. In response to these new demands, we have adapted promotion strategies, focusing on attracting projects related to the digital economy, sustainability and the digital transformation of companies.”
Laura López: “We have observed a trend in the information technology sector in which companies adopt a staggered strategy to start operations. In Costa Rica, remote work policies in the service sector allow, on average, employees to work from home at least two days per week. This trend has led many multinational enterprises to reduce their physical space; in the case of new companies, they prefer to rent smaller offices or flexible spaces. Additionally, the free trade zone regime, administered by Procomer, has been made more flexible since the pandemic to adapt to the new hybrid work modalities, facilitating business continuity.”
Source link : http://www.bing.com/news/apiclick.aspx?ref=FexRss&aid=&tid=67462cc82e514bde9e6cf0c41ce41b27&url=https%3A%2F%2Fnearshoreamericas.com%2Fipas-in-costa-rica-trinidad-and-panama-push-hard-for-new-investment%2F&c=11340564969298390669&mkt=en-us
Author :
Publish date : 2024-11-26 07:08:00
Copyright for syndicated content belongs to the linked Source.